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Parsing Obama's Decision to Opt Out

The move, which Obama announced in a video and an e-mail to supporters this morning, means that the presumptive Democratic nominee will be free to raise and spend as much money as he likes in the runup to the November election, rather than limit himself to the $80 million (or so) that would have been available to him if he accepted public financing.

It also means that Obama will open himself up to criticism from Republicans, e.g. the Democrat talks a big game on reform, but his actions don't match his words.

In announcing the decision, Obama sought to cast it as necessary for two reasons: First, that Republicans have figured out how to game the current "broken" system to their advantage; and, second, that his grassroots support from small donors has already fundamentally changed the way campaigns are funded in this country.

On the first point, Obama said: "The public financing of presidential elections as it exists today is broken, and we face opponents who've become masters at gaming this broken system. ... we've already seen that he's not going to stop the smears and attacks from his allies running so-called 527 groups, who will spend millions and millions of dollars in unlimited donations."

His point is simple: John McCain and his Republican allies are only giving lip service to playing within the rules while doing everything they can to bend them. By raising the specter of 527s in his statement, Obama is seeking to subtly remind Democrats of the damage done to John Kerry by Swift Boat Veterans for Truth in the 2004 election. It's worth noting, however, that no such national 527 with an eye on the presidential election has emerged yet on the Republican side, and there doesn't appear to be significant impetus to form one given McCain's commitment to campaign finance reform. (The thinking goes that even if a pro-GOP 527 helped McCain win the White House, there would be more anger than thanks from the new president due to his distaste for groups like that.)

Obama's second point is that his massive grassroots fundraising base has in many ways eclipsed the purpose for which public financing was created -- to keep major donors from dominating the process and building up chits that they could cash in if their candidate ascended to the presidency.

Noting that he has more than 1.5 million donors to his campaign, Obama said: "You've already changed the way campaigns are funded because you know that's the only way we can truly change how Washington works. And that's the path we will continue in this general election."

In this, he is casting his decision to forgo public funds not as anti-reform but rather as the truest kind of reform -- bottom up change driven by grassroots energy. Later in the e-mail he urges his backers to "declare our independence from a broken system, and run the type of campaign that reflects the grassroots values that have already changed our politics and brought us this far."

All in all, a sophisticated way to explain the precedent-breaking decision. But opting out doesn't come in a vacuum, and John McCain quickly (and smartly) pounced.

The McCain campaign released a statement from communications director Jill Hazelbaker condemning Obama's decision as an example of his rhetoric not matching reality.

"Today, Barack Obama has revealed himself to be just another typical politician who will do and say whatever is most expedient for Barack Obama," Hazelbaker said. "The true test of a candidate for President is whether he will stand on principle and keep his word to the American people. Barack Obama has failed that test today, and his reversal of his promise to participate in the public finance system undermines his call for a new type of politics."

First, the peril: Obama is now certain to have a massive fundraising edge over McCain in the fall -- a gap that is likely to be at least two to one and could even grow to four or five to one if the Obama money machine continues to churn as it did during the primaries.

That sort of spending advantage means that Obama can dabble in hard-to-win places like Georgia, North Carolina, Kansas and Montana without any real financial consequences. If McCain -- with his $84 million -- is forced as a result of Obama's spending edge to disburse a few million to shore up Georgia or to keep down Obama's momentum in North Carolina, it makes it far more difficult for the GOP candidate to go on offense in crucial swing states like Pennsylvania and Michigan.

But there is real potential in this decision for McCain.

One of the central fights of this election will be over who is the true reformer/change agent. It was a fight that, at least in the early going, McCain seemed to be losing, but Obama's decision to opt out of the financing system gives McCain some higher ground from which to speak from.

Obama's choice also gives McCain a major talking point as he seeks to make the argument to undecided voters that Obama is all talk and no action. McCain's campaign has already made clear that they believe that for all of Obama's rhetoric about changing the process in Washington, he has done almost nothing concrete to actually bring about that change. McCain, on the other hand, they argue, has a long and deep record of reform -- campaign finance, his leading role in the "Gang of 14" -- that shows he is more than just big talk.

The truth of the matter is that the political impact of Obama's decision to decline public financing is being sorted out even as we speak. The battle has been joined, but no victor has emerged -- and it's uniquely possible we won't know who won on the issue until election day.

For Obama, the decision was something close to a no-brainer. The possibility for a huge cash edge over your opponent -- especially when Obama's team believes strongly that it can expand the traditional November playing field -- is just too hard to pass up, no matter the hit he will take in the short term on the choice.

For McCain, Obama's opting out presents opportunity -- the opportunity to snatch back the reform mantle from a candidate who until now has been able to embody the sort of change that the American public is itching for.

The only certain outcome of this decision is that the public financing system, in place since the post-Watergate reforms in the mid 1970s, is now dead and buried. Obama's labeling of the system as "broken" means that a precedent has been set for other candidates down the line. Pandora's box is open and it isn't going to be shut.